Crypto trading is a widely discussed topic in the social media space by people from all over the world and even by celebrities and the news. You may have heard friends or people online who were early in the crypto space had made unimaginable returns from trading cryptocurrencies.
Earlier in 2021, Bitcoin caused a massive crypto craze phenomenon when Bitcoin reached USD $64k on 12th April 2021 from approximately USD $11k in Oct 2020, a growth of more than 450% in about 6 months.
Stock investors, both new and seasoned, and also people who has never traded before are asking the same question:
How to trade Bitcoin?
With all the attention that crypto is receiving, it can be tricky for new investors to figure out how to get started and where to trade in the market. But not to worry!
In this article, we will cover important details that you should know about so that you can trade safely and most importantly increase your odds of success.
Table of Contents
Crypto Guide 101: What is Cryptocurrency
Types of Cryptocurrencies
The first blockchain-based cryptocurrency that was created was Bitcoin, a highly valuable and most popular cryptocurrency asset till date. Fast forward to the present day, alternate cryptocurrencies with various functions and specifications are flooding the marketing.
A quick look at CoinMarketCap.com, a market research website, will show you a list of more than 10,000 different types of cryptocurrencies that can be traded publicly.Some of these cryptocurrencies were listed as Initial Coin Offering (ICOs), a form of capital-raising activity in the cryptocurrency and blockchain environment.
Investors usually purchase these cryptocurrencies on specific listed cryptocurrency exchanges prior to their public sales launch for the public to trade.
How Cryptocurrency Works?
The first decentralised cryptocurrency, Bitcoin, has been around since 2009, created by presumably a programmer(s) under the pseudonym Satoshi Nakamoto.
The idea behind creating a decentralised cryptocurrency like Bitcoin was to enable people to complete financial transactions over the internet. This form of digital currency was intended as an alternative payment system that is free from central control or any intermediary like a bank.
The blockchain technology that Bitcoin operates on ensures accuracy of digital records for every transaction that has ever been made by storing cryptographic information on various blocks of data. These blocks of data which have all digital records of the transaction are chained together in chronological order, creating a digital chain of blocks.
Blockchain’s decentralised feature made it possible for anyone to view the ledger of cryptocurrency transactions once the block of data has been added. to the blockchain. This means that it’s not controlled or owned by any organization.
The idea of decentralised blockchain is what made Bitcoin extremely popular, trustworthy and secure. The transaction block can’t be updated to the Bitcoin Blockchain without completing its verification mechanism using unique codes and the right encryption pattern to recognise the user’s wallet and confirm the transaction.
5 Things You Should Know About Trading Crypto
Understanding crypto for the first type can make your head spin if you’re not looking at the right places. It’s hard enough to piece all the information that you find on the internet to make sense out of it. Once you do get a good grasp on the subject, it’ll be a breeze.
Research Before Investing
The first step to getting involved in Crypto is to understand what blockchain technology is. How can they be used and its potential to advance and be more effective in processing different types of transactions.
A good starting point is to read articles, checkout online forums, videos online talking about a certain crypto or even finding out what this crypto company is building for their company’s ecosystem.
You’ll soon find out why governments, corporations are exploring this technology and looking into integrating it to their system, or why some organization take blockchain technology and cryptocurrencies as a threat to their existing ecosystem by implementing drastic measures like limiting their users to use certain feature on their platform/service them entirely.
Through your research, you may even realise that services like purchasing insurance, handling of shipping inventory, merchant payment transactions, gaming transaction, real estate transaction can utilise blockchain technology to make transaction a smoother and accurate process – All thanks to Smart Contract.
Invest What You're Willing To Lose
Crypto is a highly volatile market. Without being experience in trading, investing funds that you cannot lose is a high risk move that may cost your entire fortune in that split second.
Crypto market is driven by crypto communities and you can expect to experience hype and market sentiments more so than fundamental elements. Crypto is risky in this manner, which is also the same reason why some traders are able to profit and lose everything in that instance.
You should always exercise with utmost caution and responsible to your own funds. Never ever use a gambling mindset to execute any trades. You’re only signing up for imminent failure.
Avoid 'Get Rich Quick Scheme' Mindset
One of the many pitfalls newbies make while learning how to trade crypto is to look for a shortcut to execute their trades.
Instead of learning and gaining confidence with their own trades, they depend on crypto trading signals without knowing if the trades they have executed are reliable or not. Trade often fails, people lose substantial amounts of hard-earned money just because of laziness.
There are different crypto groups out there who may be offering free crypto trading signals or other crypto related services (i.e Crypto trading, Pump and Dump events). More often they are not legit, and can cause you to lose your money faster than you know.
This ‘Get Rich Quick Scheme’ mentality, in constant pursuit of short-term gains can hardly provide you any long term results especially if you’re not equipped with the necessary trading or technical skills.
It’s imperative that every trade that you execute is based on self-reliance, due diligence and constant hard work.
Every cryptocurrency has its own feature, popularity and their use-case for the ecosystem that they operate on. Essentially, there are different coins in the crypto space.
NEVER PUT ALL YOUR EGGS IN ONE BASKET
Bitcoin and Ethereum are the oldest and highly valued cryptocurrency till date. They research the foundation of the cryptocurrency world. For example, Ethereum’s ecosystem is constantly growing. As a utility token, it’s potential can be stretched beyond the horizon.
That’s why it’s recommended to have a sizable amount of investment for either of these coins. They are considered to me more stable.
Following, you can consider spreading the remaining portion of your funds across other types of valuable altcoins that have potential to disrupt the crypto space.
Pro-tip: Look for altcoins that solve real-world problems, not meme coins that only exist for hypes.
Tracking Your Profit & Loss
The key to profitability while trading cryptocurrencies, is to make more profitable trades than losses. You’ll need to pay attention when you should be buying and selling to profit from the margin.
You might trade on a weekly basis, monthly basis or even daily basis. No matter what your schedule is, keeping track of your trades can help you identify your mistakes and make any adjustments along the way.
This is because you’ll be able to look at your own record, analyse where you have gone wrong and if needed you may even decide to change your trading strategy when the time comes.
Decide On Your Trading Style
It doesn’t matter if you’re new or a seasoned trader, you’ll find out what is your preferred trading style as you trade and learn.
Crypto market has its own sentiments. It may be on an Upward (bullish) trend or a downward (bearish) trend. You might find that you’re better at identifying bullish trends, and can trade profitably. You’ll most likely buy low and a certain price, and sell at its peak. It’s called trading a Long position. The opposite would be trading a Short position.
Some traders are more comfortable at trading certain position sizes to manage risk. Others are comfortable trading bigger positions but with a shorter time frame.
There are traders who hold longer periods of time frames for maximum profitability trades.
Day trading, position trading, swing trading, and scalping are the most common types of trading style. It’s beneficial to find what you’re comfortable with and be good at it.
What Do You Need To Buy & Sell Crypto
The concept of buying & selling crypto is easy, but to truly set yourself apart from an average trader with a crypto trader who actually profits from the market, is to empower yourself with the necessary knowledge to increase your odds of success.
Start Up Capital - Funding Your Crypto Account
Never use funds that you cannot afford to lose! It isn’t worth it to gamble your life away thinking that you can strike a pot of gold within a short period of time. Trading cryptocurrency is a learned skillset which takes time to be good at.
Instead the wiser way is to set aside a portion of funds that you can use for investment. You may find that you can contribute more into your investment funds along the way, which you can totally do so at a later time.
With this in mind, you can then move forward to transfer your funds to trade at a cryptocurrency exchange.
Finding a Reliable Cryptocurrency Exchange
Picking the right cryptocurrency exchange can be complicated without knowing what to look out for. To help you find a reliable cryptocurrency exchange, we have prepared a checklist on the things you should look out for.
- Restricted Countries
- High Trading Volume
- Types of Trading Products
- Low Trading Fees
- Easy Deposit & Withdrawal process
- Deposit & Withdraw Fees
- Great Community Review
- Accessible Customer Service
Crypto exchanges come with different types of features, they never offer the same trading products, trading fees, customer services. Some Crypto exchanges offer more altcoins, better trading fees, or cheaper withdrawal fees than others.
Information in the checklist can easily be found on the cryptocurrency exchange’s website.
By using the checklist above while doing your research, you can get a better sense of which cryptocurrency exchange is more suitable for your use.
Learn Trading Fundamentals
Successful crypto traders are only profitable because they know what they are doing without relying on stranger’s trade signals. They execute their trades based on their trading analysis along with crypto fundamentals.
Learning trading fundamentals will help you trade safely, know when you should buy and sell. Most importantly, increase your odds of profitability for your trades.
Cryptocurrency Exchange would provide different crypto trading pairs such as ___/USDT, ___/BUSD, ___/USDC, ___/AUD, ___/ETH, ___/TRX, ___/XRP, ___/BTC, ___/BNB etc.
Crypto exchanges that are versatile can provide a lot more different crypto trading pairs. You have the option to choose the currency pairing with the base currency that you already possess.
For example, if you own USDT. Depending on your crypto exchange, you can trade crypto pairings like:
Let’s say you’re trading BTC/USDT. You’ll be trading your USDT for BTC. So if the value of BTC goes up, you can sell it and gain profit in USDT.
If you own BTC, Depending on your crypto exchange, you can trade crypto pairings like:
Crypto fundamentals analysis is another valuable skill to pick up as a crypto trader. It simply refers to understanding the intrinsic value of a crypto asset. Cryptocurrencies are native tokens of a certain crypto company that actually has a business model behind it.
These businesses are technology companies that produce their products on various decentralised blockchain networks. They can belong to different type cryptocurrency market (i.e Gaming, Exchange, Social-Network etc)
When analyzing crypto fundamentals, there are a few factors to consider to reduce the investor risk.
- Blockchain Metrics (ON-chain Metrics)
- Hash Rate
- Financial Metrics
Yes, trading patterns are used to identify best entry points for maximum profits and to mitigate risks. Trading patterns have two distinguished trends, bullish and bearish.
Bullish suggests strong, uptrend momentum. A rise in value per say.
Bearish suggests the opposite, a downtrend momentum. A decrease in value of the asset.
Trading patterns used along with other trading indicators such as the relative strength index (RSI), MACD, money flow index, can assist the trader to forecast future market movement.
The chart always tells a story, providing hints. It’s a matter of empowering yourself with the necessary knowledge to use these tools to make a profitable trade with the lowest risk involved.
Is it easy to learn trading patterns?
It’s actually quite easy once you’ve learned to use the price bar to connect the dots with lines. Learning will curve would be present but never be intimidated by it.
Secured Cold Storage Wallet (Hardware Wallet)
A cold wallet, also known as the hardware wallet, is the most secure method of storing, managing your crypto assets.
Cold storage wallets are not connected to the internet, furthermore, secured with mnemonic phrases and private keys that only you have access to. The mnemonic phrases and private keys are proof of ownership to your cryptocurrency assets. It’s paramount that the owners keep these data in a secure place.
Furthermore, you can connect hardware wallet and execute your trades on decentralised Apps (dApps). By doing so, you can ensure better security as you are keeping your funds safe in your personal hardware wallet instead of trusting your crypto funds in a company’s custodian wallet holdings.
Software wallets like Metamask is a popular choice used by many crypto traders to transfer their cryptocurrencies as well. However, software wallets need to be connected to the internet and can potentially have more risk. Cold storage wallets have a reputation of being impenetrable because of this reason.
Learn more about crypto wallets here and find out which ones will be a better fit for you.
When transferring cryptocurrencies with your crypto wallet, they use a unique wallet address supported by a particular blockchain network to complete the transfer. Completed transactions can be verified through a blockchain scanner as these records are considered public record.
These unique crypto wallet address is not easily readable by humans.
That’s why owning your blockchain domain is so easy as it allows you to input your wallet address without any fuss.
Turns to this: Mywallet.crypto
Is It Too Late To Invest In Crypto?
It’s never too late to invest in crypto. Volatility in the market will always be present. Crypto Market sentiments change from time to time. You might be seeing this when the prices are high, or when it’s low.
Opportunities to invest in crypto and make a profit are always there IF you’ve the knowledge to do so. Crypto traders are able to stay profitable regardless if the market is bullish or bearish because they have a plan and strategy in place.
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